26 September 2011: Crafar farms receiver KordaMentha rejects a conditional NZ$171.5 million offer for 16 central North Island dairy farms from a group led by controversial former merchant banker Michael Fay.

The first matter that arises is the length of time from Shanghai Pengxin’s initial application (13 April 2011), to consent being issued by relevant Ministers: over nine months.

(Strangely, 13 April 2011 was a Sunday. Is it usual for government offices to be open in the weekend?)

The OIO (Overseas Investment Office) sets time limits for itself to process application,

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Estimated decision times

There is no statutory timeframe within which an application for consent must be decided. However applications generally fall into one of three categories according to complexity with category 3 being the most complex. These categories provide a guide for how long it may take for a decision to be made:

Category 1 applications, where the OIO aims to make decisions within 30 working days from the date of registration. Examples include: (a) applications for consent to purchase significant business assets, (b) “sensitive land” decisions delegated to the OIO by Ministers that don’t fall into the categories below, (c) variations to existing consents.

Category 2 applications where the OIO aims to make decisions within 50 working days from the date of registration. Examples include: (a) “sensitive land” applications for consent requiring Ministerial consideration e.g. the purchase non-urban land greater than five hectares in size, where it includes or adjoins other sensitive land, such as conservation land, reserves etc (b) applications for exemptions, (c) applications where the overseas person is intending to reside in New Zealand indefinitely.

Category 3 applications, where the OIO aims to make decisions within 70 working days from the date of the registration. Examples include: (a) applications to acquire an interest in fishing quota, (b) applications that involve special land being land that includes foreshore or the bed of a river or lake, (c) where the applicant intends to establish a purchasing programme such as a series of land acquisitions in a specific area for a specific project, (d) applications in respect of which a third party submission has been received by the Ministers or the OIO, (e) applications where the Ministers or the OIO have decided that consultation with third parties is appropriate in considering whether or not to grant consent.

Note that these targets apply to high quality, well prepared and analysed applications, and excludes the time where the OIO is waiting for the applicant to provide further information and the time for Ministers to consider and make decisions on relevant applications.

Even if the Crafar farm sale had been considered as a “Category 3” application – there is considerable difference between 70 working days (deadline around 17 June 2011) – and nine months.

A cynic might suggest that Ministerial approval was delayed because of last years’ election. There is considerable public opposition to farm land sales to non-New Zealanders and this would have had a profound impact on National’s electoral support.

I would go so far as to say that National would have lost another couple of percentage points (minimum) in Party Votes – and therefore lost the election itself.

It is therefore National’s “good luck” that the decision to approve the sale to Shanghai Pengxin came two months after the General Election.

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A lot of Racist Angst or Righteous Anger?

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The first media reports that Ministerial consent had been granted for the Shanghai Pengxin appeared around 11am on the morning of January 27.

“As food prices rise globally, selling off our productive land − such as the Crafar farms − to overseas bidders is economic folly. Foreign ownership of the Crafar farms means that the profits will flow overseas, adding further to our current account deficit. In the 12 months to September 2011, $15.2 billion flowed out of NZ to overseas owners of NZ companies and debt.” – Source

This is an issue of considerable weight, considering that New Zealand’s credit rating was downgraded last year by two credit-ratings agencies.

Anything that increases the outflow of profits from New Zealand worsens our current account.

The question then becomes – why allow it to happen if we can avoid it? Especially since we will end up paying for offshore investors’ profits, by way of increased interest rates. Our current account deficit matters – especially when it impacts on businesses and home owners via the interest they pay on their loans.

With regards to Point #2. John Key stated,

“And had they turned it down on the basis simply of being Chinese on their desk it would have been not only be unlawful but unacceptable.” – Source

And in the NZ Herald,

“Mr Key also pointed to the Free Trade Agreement with China negotiated by the former Labour Government that contained a clause known as the Most Favoured Nation status.

That meant Chinese investment in New Zealand could not be treated differently to any other country.” – Source

So if it is true that China (or any other nation for that matter) has a “Most Favoured Nation” status, and that they are able to compete with local New Zealanders for land, businesses, contracts, etc, then I think we have a problem.

For one thing, it seemingly makes Parliament and elections an irrelevancy if we cannot restrict purchases of our assets to New Zealanders only..

Secondly, no New Zealander can hope to compete with rich overseas investors, should they have a mind to bid for an asset. Michael Fay is one of New Zealand’s richest men – and his consortium was outbid by Shanghai Pengxin by (reportedly) $30 million.

But most importantly, FTA’s are not democratic institutions. No New Zealander voter for it. Very few had a hand in agreeing to it. Yet our FTA with China appears to take pre-eminence over Parliament?

That is a dangerous position for New Zealand to be in. Especially when we possess natural resources that other nations may covet. Our naivete may yet be our down fall.

Up until 7pm on Friday, the debate had been framed – for the most part – in economic and nationalistic terms.

Then, Maurice Williamson (Minister for Land Information/ Overseas Investment Office) and Cedric Allan (spokesman for Shanghai Pengxin) were both interviewed on TV1’s “Close Up“, that night,

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Williamson succeeded in re-framing the debate over the Crafar deal. From economic and national sovereignty, he turned it into a race-based debate.

Williamson said,

“…New Zealanders were happy for Shania Twain to own 23,000 hectares or whatever.” – Williamson, 6.04

Actually, that’s just not true. Minister Williamson has either forgotten, or is fibbing,

“When the Americans, a huge number of Americans, were buying it [land], not mutter. Not a murmur. Not a whisper from all of your opponants out there. But as soon as the word ‘Chinese’ was mentioned, we were opposed to it. And I have to say that is bordering more on racism than it is on xenophobia.” – Williamson, 6.11

The charge is repeated by agri-journalist, Richard Rennie,

“We’re talking tens of thousands of hectares bought by the Italians, the Germans, even the Brits and Americans. And yet we haven’t heard a murmur from anyone in New Zealand about that.” – Source

Again, none of it is true,

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“… I didn’t hear this level of protest when huge tracts of land was being sold under the Labour government… ” – Williamson, 6.30

Then Williamson contradicted his 6.04 statement,

“Well of course the public don’t like any of our land being sold to foreigners and I understand that...” – Williamson, 8.56

Maurice Williamson had been well-prepped by his media advisors. Instead of being drawn into a debate over economics, he had succeeded in reframing the issue as one of racism. And most liberal minded New Zealanders would think twice before uttering a criticism that might be construed as racist. (Those in our society who are already racist wouldn’t care a hoot and would probably vote ACT or National anyway. They are not Williamson’s intended audience.)

This is where the racism/xenophobia meme started: Friday evening, on “Close Up“, by Maurice Williamson.

Even when we finally got to the nub of the truth, about China’s actual long-term goals, the real point by now had been lost amidst Williamson’s echoing cries of ‘racism!’.

Of course it is. And the OIO decision had nicely set in concrete China’s very long-term goals of securing food-supplies for the future,

“The conditions

…Milk New Zealand must use reasonable endeavours to assist Landcorp to extend its business to, and market its products, in China” – Source

“Pengxin announced in April 2011 after launching its bid for the farms that it planned to increase milk production from the Crafar farms by 10% and wanted to capture a bigger share of the Chinese market with branded, dairy-based consumer products. It said it planned to spend more than NZ$200 million to buy and upgrade the farms. It then planned to invest a further NZ$100 million on marketing cheeses, ice creams and baby formula for the Chinese market.” – Ibid

Is there anything wrong with increasing dairy exports to China?

Normally, no. Fonterra has been developing and building our exports to the Chinese market for the past decade. With revenues of nearly $20 billion in 2010, it is one of our major industries and export earner.

But, as mentioned before, any export-revenue to China by Shanghai Pengxin-owned farms will not come to New Zealand. They will end up in offshore bank accounts, and will be of little benefit to New Zealanders. In fact, most of the profits will vanish off-shore just as the dairy products will.

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And topped off with some rich irony.

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The Right have been leading the charge to support the Shanghai Pengxin deal, and accusing detractors of naked racism…

Meanwhile, the Left has countered with (credible) concerns about loss of export income…

The Right are not usually renowned for sympathatic understanding of racism against ethnic groups. They are usually more relaxed with “trashing the treaty”, mixed with a bit of Maori bashing, as their usual ‘sporting activity’. After all, the right wing party ACT was adamant that Maori were not going to get tangata whenua-based seats on the Auckland Super Council.

The Left, on the other hand are not usually in a position where they find themselves arguing on behalf of economic benefits; current accounts; export earnings; and sound commercial practices. What next – Socialist International on the Board of Goldman Sachs? (Actually, they might not do a half-bad job, to be honest… )

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But the final verdict?

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Lies with the voting public.

Somehow, I doubt if the public are terribly reassured by Key’s pronouncement on this matter,

“If we saw a significant buy-up of New Zealand farms, then the Government’s response would likely be to further toughen the regulations or the Overseas Investment Act, but at this point, we’re not really seeing that.” – Source

When John Campbell asked Dear Leader what constituted “a significant buy-up of New Zealand farms” (7.47) – Key was left floundering. He couldn’t name a figure. He could only waffle about vague trends. However, by the time a “trend” is established, how much of a mess will we have created for ourselves?

How much is too much?

And will our elected representatives have the wit to know when to say, “No more”?

This article from today’s “Dominion Post” deserves re-printing in full,

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Complaints as nudists hit Peka Peka

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KAY BLUNDELL

Last updated 05:00 31/01/2012

Nudists parading on Peka Peka Beach are again sparking complaints to police.

The complaints come ahead of a “skinny-dipping by moonlight” event being promoted to mark the next full moon.

Naturist group Free Beaches is inviting people throughout New Zealand to cast off their inhibitions and enjoy swimming without togs “when the great ivory ball creates a silver, rippling path across the dark blue sea” on February 8.

Sergeant Noel Bigwood, of Otaki, said police had responded to two complaints around Peka Peka during the holiday period. The first was from a father concerned about a nude man parading in front of families at the northern end of the beach.

Mr Bigwood went to look for the man but could not find him. While at the beach, he spoke to two young women, both aged about 20, asking whether they had seen a nude man walking along the beach and whether they had been offended. They told him: “Oh yes, because he was old and ugly.”

Mr Bigwood, 58, said that was a bit tragic. “The man was described as about 45 years old. You can imagine how I felt – not great.”

Nudity is allowed on Kapiti beaches as long as it is not offensive to other beachgoers.

Police also responded to a complaint about two nude men spotted near the Te Hapua Rd beach entrance, north of Peka Peka, which is a popular spot for gay men.

“As long as they keep out of the face of families and stay in reasonable seclusion, who can be offended?”

Asked about the full moon event, he said: “Skinny dipping per se is not a problem. Without revealing too much, I can highly recommend it. My only concern is water safety.”

Nice to read a bit of worldly humour from our local “Bobbies“. Too often our police are presented in a dour, negative, or critical manner in the media. Occassionally though, we see a glimpse of their humanity and the humour which – I guess – would be major requirement to do the kind of work so necessary for our society’s wellbeing.

I also felt Sergeant Bigwood’s “pain”, when the young women in the Dompost piece said,

“Oh yes, because he was old and ugly.”

I cringed as well.

Perhaps I’ll be thinking twice before hitting our local beach in the near future? Is there a beach reserved exclusively for 50+ “old and ugly” males? Where we can dive carefree into the waves – instigating mini-tsunamis in the process, that will eventually find their way to shorelines in South America and Antarctica?

I had the pleasure of a brief chat with Sgt Bigwood. And yes, folks, I can report that his sense of humour is not mis-reported in the Dompost. His light-hearted personality came through and even over the phone, he came across as a likeable chap.

Those on the wrong-side of the law in Otaki must have a hard time dis-liking the Sergeant. It would be enough to make someone go straight!

I enquired where he might put his police ID number, and where he might hang his… [comment withheld for good taste].

He laughed and replied that he always patrolled the beach fully clothed, “for the benefit of everyone concerned”.

I replied that I understood, and suggested that with his sense of humour he would be welcomed as our local “bobby”.

Sadly though, the sergeant replied that he was due for retirement in June, and would be heading of overseas to his “exotic wife’s homeland”.

Thailand? Morroco?

“No, Britain,” he replied.

However, Sgt Bigwood fully intends to return to New Zealand in a year or two after his “Big OE”, as he has too many grand children to leave behind.

We wish the sergeant all the best for the remainder of his career; his impending retirement; and a safe journey overseas. We hope he eventually returns in good health, and humour. (The latter would be a ‘given’, I’m thinking.)

The only thing is, if I ever meet up with Sgt Bigwood on Otaki Beach, would I recognise him without his uniform…?

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John Key laments that he could do nothing to stop the sale of the Crafar farms to overseas investors because of our Free Trade Agreement with China. Shanghai Pengxin had as much right to bid for, and have their bid accepted, as any other bidder in this country,

Key says that attempting to halt the sale would have meant the Chinese suing us for breaching the FTA, as he was quoted in the Otago Daily Times,

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““Ministers could have overturned that decision, but there were no reasons to do so. The OIO correctly interpreted the legislation, and had they turned it down simply on the basis of being Chinese, it would not only be unlawful but unacceptable and would have been overturned in the courts.” ” – Source

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In which case, how will John Key ensure that Kiwi “mum and dad” investors are allowed first option to buy shares in soon-to-be privatised state power companies – without Chinese demanding the same right to bid,

Unfortunately (for us), as CO2 levels, temperatures, and acidification rise, these will impact on the state of our oceans. What profound impact these changes will have on the oceans’ eco-systems is anyone’s guess – but it’s not looking too flash for us,

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Even if global warming doesn’t kill of the fish stocks – human over-fishing, it seems, will do the job. And by the year 2050AD – when the human population is expected to rise to an estimated 9 billion – is precisely when food supplies will be desperately needed more than ever.

Little wonder, then, that demand for farmland to grow protein for burgeoning populations is rising.

John Key stating that he could not see how foreigners owning New Zealand farms would be in our best interests, and he would not want to see New Zealanders “tenants in their own country“…

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This is now…

27 January 2012

John Key explaining why it is a good thing for overseas investors to be buying up New Zealand farmland – and hey, anyway, government is “powerless” to stop these buy-ups.

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Which raises two important issues;

Why should anyone trust a single word to escape from John Key’s mouth? That man has demonstrated on so many occassions that he simply cannot be trusted – he will say one thing, and then later, do the complete opposite.

When did New Zealand cede sovereignty to overseas corporate interests? I can’t remember this ever being discussed or debated.

Have we actually signed away our sovereignty; our right to determine who we can or won’t sell to?

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If the NZ-China Free Trade Agreement – that John Key refers to – is constraining us from being unable to stop the sale of the Crafar Farms to Shanghai Pengxin, (and remember – this is John Key talking) – then we need to re-visit those Agreements.

Because, as sure as day follows nights – the Chinese do not permit theirland to be sold to foreigners. So why are we being coerced into selling our land to them?!?!

Does anyone know the answer to this very simple question?

Because I sure as hell don’t.

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In reply to Williamson & Key…

Much has been made of the nationality/ethnicity of the buyers of the Crafar Farms. National’s John Key, Maurice Willamson, et al, have played the “race card” in their favour, trying to paint criticism of the buy-up as somehow “racist”.

Yet, as media reports show, the gradual alienation of our land to foreigners has been carried out by various nationalities…

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2002

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2004

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2005

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2009

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2010

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2011

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2012

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And yet, as recently as April, 2010, the Real Estate Institute of NZ was warning us that “overseas investment would compete with young farmers“,

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When even a very wealthy man such as Sir Michael Fay cannot outbid a Chinese-government backed buy-up of New Zealand farmland – then we are in very serious trouble. No young New Zealander can hope to compete with German corporations; American billionaires; Chinese government-corporate proxies.

In effect, we are witnessing the forfeiting of our farming heritage to our children. And we are allowing it to happen. If this is not sheer stupidity, then I don’t know what it.

This is why the governments of Middle East oil-producing regions re-nationalised their oil fields. Allowing oil companies to own the oil fields; extract the oil; process it; and sell it, allowed companies like BP, Shell, ExxonMobil, etc, to reap billions in profits.

Meanwhile, the countries upon which the oil fields rested made only a small amount in “royalties”.

“We feel instinctively that societies with huge income gaps are somehow going wrong. Richard Wilkinson charts the hard data on economic inequality, and shows what gets worse when rich and poor are too far apart: real effects on health, lifespan, even such basic values as trust.”

Why do I get the impression that this story just screams desperation, from this government?

Aside from the fact that many sceptics voiced doubts last year about National’s optimism to “balance the books”, and considered it nothing more than election propaganda for gullible voters, Dunne’s comments on this issue beggar belief,

“‘We just had public consultation on the use of mixed assets such as holiday homes and launches, and we’ve been doing other work looking at the tax treatment of various forms of activity.”

”That programme needs to be ongoing… what we should be doing is making sure we are collecting all the existing taxes which are due and if there anomalies and loopholes we need to be closing those to make sure the system is fair to everyone.’

It was estimated the Government was missing out on hundreds of millions of dollars of revenue a year.” – Ibid

Whut?!?!

“We just had public consultation on the use of mixed assets such as holiday homes and launches…”

“…what we should be doing is making sure we are collecting all the existing taxes which are due and if there anomalies and loopholes…”

Isn’t this precisely what Labour was suggesting last year with it’s Capital Gains Tax?

The Green Party certainly made that connection,

” “Bill English has failed to close the single largest remaining loophole in our income tax system. A comprehensive tax on capital gains (excluding the family home) is hugely progressive and would help close the growing gap between rich and poor,” said Green Party Co-leader Dr Russel Norman.

“Treasury advice to Bill English in 2009 made it clear to him that capital assets are owned disproportionately by higher income families. The advice said not taxing this income is regressive. That’s Treasury’s way of saying that a capital gains tax is incredibly fair.

“Both John Key and Bill English have consistently defended the tax loophole, however, preferring to ignore growing inequality in our society…”

…“The largest proportion of capital gains is earned by those at the upper end of the income spectrum. This income currently remains untaxed,” said Dr Norman.

“This tax loop-hole for those that can afford to own multiple properties needs to be closed.” ” – Source

So much for John Key stating last year,

“Scrapping the top income tax bracket reduced the value of highly leveraged investment properties as a tax shelter, while tougher rules on depreciation and LAQCs also reduced their relative attractiveness as investments.

Labour, Prime Minister John Key declared on Monday, is “fighting a problem they had when they were in office, not a problem we have today”. ” – Source

“It’s difficult to detect any sort of principle – liberal or otherwise – in the economic policies we could reasonably expect to address the widening income gap. Gaping loopholes in our tax system permit those with wealth to earn tax-free gains – putting them further ahead than ever.

While the Government sees fit to give a handout to working families earning $100,000 per year (nearly twice the average wage), those who can’t meet bureaucratic hoops miss out on support altogether and we have abandoned targeting in toto for the politically powerful (the elderly).

Equally worrying, current tax policy incentivises investment for capital gains, causing excessive investment in property at the expense of business – something which has hindered the long-term outlook for incomes and jobs.” – Source

National’s tinkering with the tax system is not going to address the shortfall in government revenue. We will simply see more of the above headlines in future media, as the core-problems in our taxation system go unaddressed.

National simply does not have the intestinal fortitude to address taxation problems in any meaningful way. If they did, they would,

Implement Labour’s capital gains tax

Stop Trusts from being tax havens

Reverse the 2009 and 2010 tax cuts for those earning above $70,000

Implement a Financial Transactions Tax

Review Working for Families payments for families earning over $100,000

Unfortunately, none of the above will happen. Generally, only reformist Labour governments have the inclination to make radical changes when they become blindingly obvious as necessary.

It also takes a collective frustration from Voterland to “connect the dots” and realise that voting for National will not achieve longterm reforms.

In the meantime, Dunne will tinker; National will continue cutting services; government workers will continue to be sacked; and we’ll see more of the following, as our economy stumbles along like a diabetic with low blood sugar,